Economic Recovery Tax Act of 1981
Fall
Economic Recovery Tax Act of 1981
Merlin G. Briner 0
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INTRODUCTION
T-HE 1981 ACT represents a dramatic approach to the revision of the
federal tax law. For the first time in recent history Congress has
drastically reduced income, gift and estate taxes. The goals of the Act as
set forth in the report of the United States Senate Finance Committee are:
to insure economic growth in the future; to upgrade the country's industrial
base; to stimulate productivity and innovation; to lower personal income
taxes; to control the growth of the federal government; to restore certainty
to economic decision making; and to provide a sound basis for economic
recovery. The objective of the $750 billion tax cut to be phased in by 1987
is to restore and create incentives for both individuals and businesses to
"work, produce, save and invest."
In essence this Act and the results it either produces or fails to produce
will be a test of our free enterprise system. The Act, coupled with the
administration's policy of deregulation and relaxing government controls of
business, provides the opportunity business leaders have been looking for.
A key to future economic health is the reduction of federal expenditures.
If these cannot be curtailed, the combined effect of expenditures and
reduced tax revenues on inflation will be disasterous. If expenditures cannot
be controlled, then taxes will have to be increased substantially in the not
too distant future.
As this article goes to press, measures the administration is proposing
include: requiring corporations and contractors to pay taxes earlier;
eliminating tax credits for insulation and solar heating; restricting the issuance
of tax exempt industrial development bonds; and increasing the income tax
on unemployment pay. Democrats and some Republicans are also urging
that excise taxes on gasoline, telephone calls, cigarettes and liquor be
increased; that cost of living increases for retirees be deferred and that oil
tax breaks be restricted.
Compiling this article required a concentrated effort to meet the
publication deadlines for the fall issue of the Law Review. This article, in
addition to the annual Tax Developments article, proved the dedication
of the contributing authors and the Law Review staff. Appreciation is
hereby expressed to the following students who made substantial
contributions in the researching and writing of this article:
*Professor of Law, University of Akron School of Law; formerly Manager, Tax Department,
The Timken Co., Canton, Ohio; B.A.A., Wichita State University; J.D., University of Akron
School of Law.
Published by IdeaExchange@UAkron, 1982 [325]
Ann Amer Brennan
David C. McAlister
Special appreciation is extended to William
for their dedicated efforts in editing.
William R. Meyer, Jr.
Thomas J. Thomas
Meyer and Amie Bruggeman
Individual Income Tax Changes
1.01 Individual Income Tax Rate Changes
1.02 Maximum Capital Gains Rate - Personal Holding Company Rate
1.03 Alternate Minimum Tax
1.04 Marriage Tax Lessened
1.05 Exclusion for Dependent Care
1.06 Savings Interest Exclusion
1.07 Child and Dependent Care Credit
1.08 Indexing
1.09 Residential Exclusion Amount for Over 55's Increased
1.10 Sale of Residence Roll-Over Period Increased
1.11 Dividend Interest Exclusion
Corporate Business Tax Changes
2.01 Corporate Charitable Deduction Raised
2.02 Gifts and Awards to Employees
2.03 Corporate Tax Rates Lowered
2.04 Tax Credit and Extension of Loss Carryovers
2.05 Subchapter S Corporations
2.06 Accumulated Earnings Tax Credit Increased
Business Incentive Provisions
3.01 Election to Expense Certain Assets
3.02 Anti-Churning Rules
3.03 Minimum Tax on Accelerated Cost Recovery System
3.04 Accelerated Cost Recovery System for Personal Property
3.05 Accelerated Cost Recovery System for Real Property
3.06 Carryover of Recovery Attributes
3.07 Calculating Earnings and Profits Under Accumulated Cost
Recovery System
3.08 Research and Development Credit
3.09 Safe Harbor Leases
3.10 Incentive Stock Options
3.11 Investment Credit - New Percentage Applicable
4.00 Retirement Savings Provisions
4.01 Individual Retirement Accounts - Deductions, Contributions and
Eligibility
4.02 Qualified Voluntary
https://ideaexchange.uakron.edu/akronlawreviewE/vmol1p5l/oisys2e/e3 Contributions
Briner: Economic Recovery Tax Act of 1981
ECONOMIC RECoVERY TAX AcT OF 1981
Keogh, Simplified Employee Plan (S.E.P.) and Subchapter S Plan
Qualified Retirement Plan - Constructive Receipt
Employee Stock Ownership Plan - Payroll (...truncated)